Getting caught up on a week that got away? Here’s your weekly digest of The Globe’s most essential business and investing stories, with insights and analysis from the pros, stock tips, portfolio strategies and more.
Bank of Canada holds key interest rate at 2.75%, cites ‘unusual uncertainty’
Bank of Canada Governor Tiff Macklem said on Wednesday there was consensus among the governing council members to hold rates steady.Adrian Wyld/The Canadian Press
The Bank of Canada held its key interest rate steady at 2.75 per cent for the second consecutive time, citing “unusual uncertainty” around inflation and continuing trade tensions with the United States. The decision to remain paused followed higher-than-expected inflation last month.
Governor Tiff Macklem said in a press conference after the rate announcement that U.S. trade policy remains the “biggest headwind” facing Canada – and that the trajectory of the economy, inflation and interest rates depends heavily on what happens with tariffs. He said there was consensus among the bank’s seven-member governing council in favour of holding interest rates steady, but a “diversity of views” about where interest rates should go from here. Markets are pricing in between one and two more quarter-point cuts before the end of the year.
In other economic data news, Canada’s unemployment rate rose to 7 per cent in May amid a gain of 8,800 jobs in the month, Statistics Canada said, marking the highest unemployment rate since 2016 outside the pandemic years.
Trump hikes steel and aluminum tariffs to 50%
Coils of rolled steel in Hamilton. The Trump administration's doubling of tariffs on metal imports is expected to hurt Canada's economy, as the largest supplier of both steel and aluminum to the U.S.Carlos Osorio/Reuters
U.S. President Donald Trump has increased tariffs on steel and aluminum imports from 25 per cent to 50 per cent in an escalation of his global trade war. Mr. Trump signed the executive order on Tuesday, and the new rate went into force at 12:01 a.m. Wednesday. Canada is the largest supplier of both steel and aluminum to the United States, accounting for about half of aluminum imports last year and nearly 25 per cent of steel imports in 2023.
Prime Minister Mark Carney said in a statement that the tariffs are “unlawful and unjustified” and his government is holding talks with the U.S. to have all levies lifted as part of an economic and security agreement. Mr. Trump has said his goal is to stop imports of the metals into the U.S. in a bid to return manufacturing jobs to his country. The tariffs could, however, backfire on the U.S. by inflating prices for consumers.
Prime Minister Mark Carney says the U.S. decision to double tariffs on steel and aluminum is not justified and will harm Americans as well as Canadians.
The Canadian Press
Decoder: America’s trade deficit with Canada is vanishing
Canada posted a $7.1-billion merchandise trade deficit in April — the largest on record — as exports fell sharply in the face of U.S. tariffs. The value of exports to the U.S. fell 15.7 per cent, compared to the previous month, Statistics Canada reported. The decline was led by a sharp pullback in autos, consumer goods and crude oil exports. Meanwhile, imports from the U.S. dropped 10.8 per cent.
A silver lining from the gruesome trade numbers, Jason Kirby writes, is that one of the dubious excuses behind Mr. Trump’s trade war with Canada is rapidly going away. Mr. Trump has often claimed that the U.S. trade deficit with Canada is between US$200-billion and US$250-billion. In reality, the annual trade deficit was around US$60-billion last year. And now, with Canadian exports to the U.S. tumbling, the U.S. trade deficit is rapidly vanishing. Take a closer look at the numbers in this week’s Decoder series.
Is AI dulling critical-thinking skills? As tech companies court students, educators weigh the risks
Illustration by Coralie Mayer
Generative artificial intelligence is being touted as a powerful technology that will change the world. Developers say it will empower us as humans and enhance our skills. But maybe it carries the potential to erode our abilities instead. A recent study found that a greater reliance on AI tools, such as ChatGPT, is associated with lower critical-thinking abilities – especially among young people.
Teachers are especially concerned about the impact of AI, as many of them are seeing students hand in assignments that appear to be written by ChatGPT. Joe Castaldo spoke with educators as they calculate the long-term impact of AI on thinking, or really how much we’ll be thinking at all.
From investing to real estate, here’s how you can Trump-proof your wallet
Illustration by Pei Yuan Li
How will U.S. tariffs affect your personal finances? It’s a question that’s been asked ever since Mr. Trump launched his trade war in February. In this time of uncertainty, people want to know the best way to manage their portfolios, household finances and lives. Should you sell your U.S. stocks? Should you retire now? How do you recession-proof your portfolio? Globe reporters answer 42 essential questions about your finances in this market uncertainty and how Canadians can Trump-proof their wallets.
Take our business quiz for the week of June 6
c. About half. Ouch. U.S. steel and aluminum tariffs hit Canada hard because we supply about half of all aluminum imports to the United States, as well as nearly a quarter of steel imports.
Get the rest of the questions from the weekly business and investing news quiz here, and prepare for the week ahead with The Globe’s investing calendar.